EU citizens could be free to move to Britain until 2021 under a two-year Brexit transition period, Theresa May has said.

Free movement of people under EU law will formally end on Brexit day, expected in March 2019, but the only major immigration control that will be applied during the transition would be a requirement to register with the authorities.

In a landmark speech in the Italian city of Florence yesterday (September 22), the Prime Minister hoped to break the deadlock in Brexit negotiations that have defined her premiership.

The move is designed to ensure "access to one another's markets should continue on current terms" after EU withdrawal but will raise questions over whether Brexit is just being delayed.

These are some of the key points Mrs May raised in her speech:

Free of movement for EU citizens into Britain to remain until 2021

UK could make contributions to EU coffers until 2020, costing an estimated £18 billion

Courts in UK would be able to "take into account" rulings of the European Court of Justice on EU law following Brexit

PM will not say how much Westminster will pay EU in Brexit 'divorce bill'

Pre-existing models for UK-EU relationship such as Norway and Canada are "unimaginative"

Tariffs on trade between UK and EU are not necessary

The Bill

Although Mrs May pledged that other EU nations would not be left out of pocket with an estimated contribution of around £18 billion (around 20 billion euro), she declined to put a figure on the so-called divorce bill until negotiations were settled.

But she insisted estimates of Britain's liabilities ranging from £50 to £80 billion were "exaggerated and unhelpful" as a Government source stressed there would be no payments for access to the single market or beyond the transition.

However, money could be made available for specific programmes, for example in science and research.

'Creative solution' needed

The PM once more rejected off-the-peg models for a future UK-EU relationship, describing a Norway-style membership of the European Economic Area (EEA) or Canada's free trade deal (Ceta) on goods as "unimaginative".

Evoking the Renaissance in a church complex adorned with artworks from the era, the PM called for "a creative solution to a new economic relationship that can support prosperity for all our peoples".

She assured EU nationals living in the UK that she wanted them to be able to "carry on living your lives as before", and said protections for them would be written into UK law.

The PM insisted the UK needed a different model for a relationship with the EU to Norway and Canada

In a significant concession, she said that UK courts would be able to "take into account" rulings of the European Court of Justice on EU law following Brexit.

And she said a new judicial mechanism would have to be developed to resolve disputes over the implementation of the withdrawal agreement, as it would not be appropriate for either the ECJ or the UK courts to be the final arbiter.

Mrs May said there would be no need for new tariffs on trade between the UK and EU and promised that any future UK divergence from EU rules would not be designed to gain an "unfair competitive advantage".

The Reaction

The speech was described as "constructive" by the EU's chief Brexit negotiator Michel Barnier but he raised questions over whether the financial offer "covers all commitments" made by the UK as a member state.

Mrs May's 35-minute address was hailed as "positive, optimistic and dynamic" by Boris Johnson, who was in the audience just six days after publishing a 4,000 word personal Brexit manifesto which exposed Cabinet rifts over the future relationship.

But the Foreign Secretary admitted it could take until 2021 to fully repatriate powers as promised by the Leave campaign, telling reporters: "As the Prime Minister rightly said we are going to have a transition period and after that of course we are going to be taking back control of our borders, of our laws, of our destiny."

Boris Johnson hailed the speech as 'positive, optimistic and dynamic'

Mrs May was expected to telephone Polish PM Beata Szydlo immediately after the speech in what is believed to be the first direct reaction from an EU leader, none of whom were in an audience made up mainly of Westminster reporters and Italian business and diplomatic figures.

Manfred Weber, a German MEP and close ally of Chancellor Angela Merkel, said: "In substance, PM May is bringing no more clarity to London's positions. I am even more concerned now."

Labour leader Jeremy Corbyn said Mrs May's speech "appeared to be the product of negotiations within the Tory Party rather than negotiations with the EU".

Enthusiasts for hard Brexit were scathing about the PM's stance, with former Ukip leader Nigel Farage saying it would mean the UK leaving the EU "in name only".

'A failure in the eyes of history'

Notably, Mrs May did not repeat her previous mantra that "no deal is better than a bad deal" in her speech, but asked later whether this remained the Government's position, she told reporters: "We continue to believe that."

Mrs May addressed a largely British audience in Florence

In a warning to EU leaders, who must decide next month whether sufficient progress has been made in divorce talks to move on to discussion of the future relationship, Mrs May said that if no agreement was reached "it would be a failure in the eyes of history and a damaging blow to the future of our continent".

At the Santa Maria Novella church, Mrs May addressed a largely British audience, including Mr Johnson, Chancellor Philip Hammond and Brexit Secretary David Davis, many of whom had flown to Italy that morning to hear her speak.

Downing Street declined to say how much it had spent on hiring the hall in the church's complex.

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